Cable suggests 50p tax row deal

Liberal Democrats could allow the 50p rate of tax on top earners to be dropped if the Tories agree to impose a "mansion tax" in return, Vince Cable said.

PUBLISHED: 18:29, Sat, Sep 17, 2011

Business Secretary Vince Cable indicated the Lib Dems could strike a deal over the 50p top tax rate [PA]

Liberal Democrats could allow the 50p rate of tax on top earners to be dropped if the Tories agree to impose a "mansion tax" in return, Vince Cable said.

In the strongest signal yet of a potential deal, the Business Secretary indicated that the idea was "out there as a proposal".

He said it was important to be pragmatic about the issue which has become a public battleground between the coalition partners as conference season gets under way.

Mr Cable struck a less strident tone than party leader Nick Clegg who earlier upped the rhetoric by saying any cut to the 50p rate would be "utterly incomprehensible" to voters.

"It is not going to happen - certainly not until there is significant progress on giving tax breaks to those on lower and middle incomes," Mr Clegg told The Independent.

"It would be utterly incomprehensible for millions of people who work hard, do their best for their families, and play by the rules, if suddenly the priority is to give 300,000 people at the very, very top a tax break."

Chancellor George Osborne has made no secret of his desire to end the 50p rate, imposed by the previous Labour government, which is unpopular with many Conservative MPs.

Mr Cable told party members at the Birmingham conference that one option was the levy on £2 million-plus properties he championed before the general election.

"The argument for that has increased because of the way the property market has worked, particularly in high value areas like London," he said. "So that is out there as a proposal. It is not in the coalition agreement but if the Conservatives were willing to run with that then one could be more flexible with the 50p rate."

He insisted that there could be no movement on 50p without the well off being targeted in other ways, saying: "We are in abnormal conditions. We have a society where a lot of people are getting hurt, there's a lot of austerity and it is absolutely right in principle that the better off people in society should pay a bit more. We have a pragmatic approach to this and we have said there are other ways in which the better off people in society could contribute - the mansion tax."

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